Australia: top-up shopping boosts $16.5bn convenience market

Australian shoppers turned to convenience stores during the economic downturn but retailers are under increasing pressure from punitive tobacco legislation. Sheryle Moon, executive director of the Australasian Association of Convenience Stores (AACS) reports, ahead of the NACS Global Forum in Sydney, Australia, 19-21 June 2010.

Sheryle Moon: economy has favoured convenience but challenging times lie ahead

Australia dodged the worst of the global economic downturn, however, the impact can be seen in a couple of areas in the convenience store.

While we await the official picture with the Australasian Association of Convenience Stores (AACS) State of Industry 2009 Report, which will be released on 16 February 2010, there is evidence consumers changed their buying behaviours away from the large, fortnightly supermarket shop to a more frequent, smaller basket of goods in a top-up shop. This is particularly true in the inner-city, single-people or couple households.

With a convenience store for every 1,500 people in Australia, nearly every Australian stops at a convenience store - their local convenience store. They pop in on the way home from work or school. They increasingly grab a morning coffee, a lunchtime wrap or an afternoon snack. They walk to or drop in after filling up with petrol.

The 15,000 convenience stores in Australia have approximately 7.5m visits a day, every day of the year. Open 24 hours a day, seven days a week, the sector provides an extraordinary showcase for makers of consumer products. The sector turns over $16.5bn per annum and employs in excess of 150,000 people.

But other evidence points to an increase in theft and criminal activity in the c-store and service station sector during 2009. Such behaviour would be consistent with tighter economic conditions. AACS and its Health Safety Security Environment (HSSE) forum are looking at ways to ensure the sector is, and is perceived as, a safe one, particularly as employment rebounds and we see evidence of the inevitable skills shortages.

The big issue in 2009 was undoubtedly tobacco with more onerous legislation enacted and implemented in New South Wales (NSW) and the Australian Capital Territory (ACT).

Point of sale restrictions were introduced in NSW (only one POS for tobacco sales) and retail display bans enforced for large organisations (over 50 employees) from 1 January 2010. All other retailers will have to comply from 1 July 2010. Victoria and Western Australia will introduce retail display bans effective January 2011 and we are on alert for the remaining states and territories to fall in line with the existing restrictions.

In 2010 AACS will continue to question the validity of these approaches, given there is no research evidence that supports the health outcomes claimed by policy makers and regulatory enforcers of these legislative moves.

In October 2009 we called on lawmakers to make it illegal for under-18s to smoke and introduce prosecution and penalties for those who are caught in the act. While it is illegal to sell cigarettes to anyone under 18, it isn't illegal for kids to possess a packet of smokes or have a puff.

We continue to talk of the burden on retail outlets such as our convenience stores, corner shops and petrol stations that carry the sole burden of legal responsibility for preventing youth smoking and they are being hit with large fines if they don't.

Under liquor laws, if a child is sold or given liquor on licensed premises, both the child and the licensee have committed an offence and can be punished accordingly.

Yet, when it comes to the sale of tobacco products, only the retailer is penalised. We will continue this theme. ACCS is currently responding to a senate inquiry into plain packaging on the basis this is policy making without any evidence of successful health outcomes.

2010 is an election year federally in Australia and we expect to see a lot more agitation from the Preventative Health Taskforce, who in their recommendations to Parliament in September last year, called for warning labels on high salt and high fat products. We are also aware of campaigns in the USA, that may be replicated here, which depict soft drink as a glass of fat.

The pricing regulatory body has also suggested an inquiry into petrol pricing after it ruled against the Caltex takeover of Mobil outlets in Australia. There is also a number of regulations in the 'green' space including vapour recovery, bottled water and container deposit legislation.

In 2010 the Australian economy but will be hit with higher interest rates and rising inflation as the economy recovers throughout the year.

There is no doubt that rising costs for households, mortgages, insurance and utilities may impact the retail sector. We hope that Australians will continue turn to convenience stores for their top-up shopping as well as their on-the-go coffee and food requirements.

AACS is looking forward to a busy year that improves the economic and business environment for retailers and suppliers in the convenience sector.